Michigan Business Tax (MBT) Repealed and Changes Made to Individual Income Taxes In an effort to simplify the tax code under what has been called the “job-killing Michigan Business Tax” (also known as the MBT), Governor Rick Snyder signed into law Michigan’s new Corporate Income Tax on Wednesday, May 25, 2011. This new tax will improve Michigan’s place to 16th in the nation with its new low level of state and local business taxes and will have the lowest corporate tax in the Midwest. The new Corporate Income Tax rate of 6% will take effect on January 1, 2012 and will apply only to companies that hold the status of “C Corporation.” S-Corporations, partnerships, LLCs, and individuals that were previously required to file the Michigan Business Tax (MBT) return will not be taxed nor require filing under the new Corporate Income Tax. Also, many of the deductions, credits and exemptions allowed under the MBT will no longer be available under the new tax code. In addition to the new Corporate Income Tax, the new law includes changes that will affect personal income taxes.  The state income tax rate for individuals will remain at 4.35% until January 1, 2013, when it will be lowered to 4.25%. Beginning January 1, 2012, a portion of retirement income will be taxed for taxpayers born after 1946 and public pensions will be subject to state taxes. Military pensions will remain exempt from tax. For more detail on the new law and tax code, see the following link to the State’s website: http://www.michigan.gov/som/0,1607,7-192-53480_56421-256823--,00.html.